Paul Greenwood, of North Salem, New York, was permanently barred from trading commodity futures and options contracts following a consent order entered by a federal court on July 28, 2010. The U.S. Commodity Futures Trading Commission (CFTC) brought charges against Greenwood for operating a $1.3 billion investment scam that misappropriated at least $553 million from commodity pool participants.
The court order, filed in the U.S. District Court for the Southern District of New York, also prohibits Greenwood from soliciting funds for trading, registering with the CFTC, and acting in any official capacity for a CFTC registrant. The specific amounts of disgorgement and civil monetary penalties will be determined by the CFTC and the court at a later date.
According to the order, from at least 1996 through 2010, Greenwood fraudulently solicited approximately $7.6 billion through Westridge Capital Management and WGIA, LLC. Victims included institutional investors such as pension funds, retirement plans, and charitable foundations. Greenwood falsely claimed funds would be used for an equity index arbitrage strategy, but instead diverted the money for his personal use.
The order holds Greenwood liable for futures fraud and misappropriation of funds. To conceal the misappropriation, Greenwood manufactured promissory notes to falsely suggest funds were loaned to him. Approximately $80 million was diverted to Greenwood through companies he controlled, the CFTC alleges.
On the same day the consent order was entered, Greenwood entered a guilty plea in a related criminal action in the U.S. District Court for the Southern District of New York. The Securities and Exchange Commission also pursued a separate action against Greenwood, resulting in a consent order. Litigation against other defendants and relief defendants remains ongoing, with efforts to return funds to defrauded pool participants continuing.
The CFTC collaborated with the National Futures Association, the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Securities and Exchange Commission on this case.
Source: CFTC.gov
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